Savvy Uses for Smart Cards

October 24, 2000
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REDMOND, Wash., Oct. 24, 2000 — Today, at the Cartes 2000 conference in Paris, Microsoft announced a series of major sales and development partner agreements for multi-application cards based on the Windows for Smart Cards operating system. Smart card manufacturers have bought licenses to produce more than 40 million Windows Powered Smart Cards over the next two years. To learn more about smart cards and the significance of Microsoft’s announcements, PressPass spoke with Philippe Goetschel, director of Microsoft’s Smart Card division.

PressPass: What are smart cards and what do they enable for consumers and corporate customers?

Goetschel: Smart cards are cards with a memory, cards that have a microprocessor embedded in them. They come in two common forms. The first is the size of a credit card and can give users secure computer access and transactions as well as the ability to store important information. For example, Windows Powered Smart Cards give corporate users the most secure logon for Windows 2000, with access to the Web. We’re also targeting the health market, where smart cards can store private health-oriented information. Of course, there are a number of new uses for smart cards as payment devices, when they are used for credit, cash and debit purposes.

The second common form of smart cards is the Subscriber Identity Module (SIM) card, which is no bigger than a thumbnail. SIM cards are a component of mobile phones used in Europe and most of the world, which operate on the Global Standard for Mobile Communications, or GSM. Our Windows for Smart Cards operating system allows applications like SIM Outlook to be placed directly on the SIM card. A mobile phone using SIM Outlook allows you to browse your contacts, your calendar, and send and receive email on your cell phone.

PressPass: What is Windows for Smart Cards, and how does it relate to other Microsoft operating systems like Windows 2000 and Windows CE?

Goetschel: Windows for Smart Cards is a very small, very secure operating system that Microsoft created from the ground up for the smart-card industry. However, it is a Windows operating system, so when you develop applications for Windows for Smart Cards, the system looks and feels the same as Windows. The development environment of Windows for Smart Cards allows you to write applications using familiar development tools like Visual Basic and download them onto the cards. Smart cards in general will also be playing an important part in providing secure authentication and authorization in the .NET platform.

PressPass: What has been the response to Windows for Smart Cards?

Goetschel: We have been extremely gratified to see such a favorable response from all sectors of the smart-card industry within a year of releasing our Windows for Smart Cards Toolkit. More than 120 independent software vendors (ISVs) are making applications and services for the operating system, over 15,000 programmers worldwide are working with the operating system, and 35,000 toolkits have been distributed through retail chains and Microsoft’s MSDN developer program. In total, smart-card manufacturers have purchased the rights to produce over 40 million Windows Powered Smart Cards in the next two years.

The response has been favorable because we provide a general platform for smart cards, where historically there have been many incompatible proprietary smart-card operating systems. This platform approach gives our customers two main benefits. First, it gives smart cards instant interoperability, so an application written for Windows for Smart Cards can be loaded onto smart cards sourced from different manufacturers that use our operating system. The second benefit is potential cost savings, since smart card developers can now source cards from different suppliers, thereby minimizing the cost of the cards.

PressPass: Are there any smart-card solutions being deployed that are running the Windows for Smart Cards operating system?

Goetschel: Yes, we are excited by a number of end customer rollouts. In the United States, LifeStream Technologies will be distributing 500,000 of our smart cards in their new home cholesterol kit. This gives their customers the ability to keep accurate test records on a smart card, making them truly private yet easily accessible electronically. Windows Powered Smart Cards will also be at the heart of British Telecommunication’s smart card network security and logon service, which is designed to allow mobile workers to securely access the company intranet.

Banverket, the Swedish railway operator, is developing one of the most interesting uses of Windows for Smart Cards. Rail customers in Sweden will soon be able to use their cell phones to purchase and confirm rail tickets. Using a GSM phone with a Windows for Smart Cards-powered SIM card, rail travelers will be able to get directly on the train, dial into a central processing center and purchase rail passage. Because the credit card information is encoded on the SIM card, the purchase can be made without waiting in line and without a paper ticket. When the conductor comes by, the customer simply shows him or her the confirmation code on the cell phone.

The mobile payment market is something that’s definitely being enabled by SIM cards. We believe that Windows Powered Smart Cards can add a lot of value because it’s just a matter of our SIM cards talking to back-end servers like the Microsoft Commerce Server.

PressPass: Most of the examples you’ve given of smart-card use come from Europe. Is Europe more advanced than the United States in this area?

Goetschel: Particularly in Europe, the SIM card market is more advanced, because the GSM is the cellular phone standard there, as it is in much of the rest of the world. There are approximately 160 million cell phones worldwide that operate on the GSM standard, all of which contain a SIM card. While in the U.S. there are millions of phones, the market is fragmented into a number of competing standards like CDMA, TDMA, and to a lesser degree GSM. The European market for smart cards is much larger and easier to address.

PressPass: What part is Windows for Smart Cards playing in the SIM card market?

Goetschel: We’ve been asked by large European telephone networks to put telecommunication applications on SIM cards. Why on a smart card and not in the phone? The answer is that the smart card is cheaper to deploy to an installed base. A large European operator that runs on GSM can put an application like SIM Outlook on a SIM card. They can then mail it to their subscribers, and the end user can put it directly in their cell phone. The phone would then be able to operate Outlook without making any changes to the hardware infrastructure. Or a user could buy a prepaid phone card at a pharmacy, and on that card could be an application like SIM Outlook. The bottom line is that it is far easier and cheaper to upgrade phones by using programmed SIM cards than by updating your entire installed base with new phones.

PressPass: When will we see increased usage of smart cards in the United States?

Goetschel: There are several factors pointing to increased usage in the U.S. First, the move toward a global phone standard will only increase over time, meaning that there will be interoperability between phones and therefore SIM cards. That will clearly increase the usage of smart cards in the United States. We are also seeing movement in the government sector, with the federal government preparing to issue them to members of the military. Individual soldiers will be issued smart cards with their personal, mustering and health information. This way, whenever a soldier checks into a new base, the command has the soldier’s history right there on the smart card. Other government workers will use it for a secure logon to high-security computer networks. In the commercial sector, smart cards will become increasingly important for applications in mobile payment. Having your credentials stored on a SIM card will be very important as people get more security conscious about online purchasing.